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PNC Considers Selling BlackRock Stake

"We have long argued that PNC should be able to generate higher profitability out of its existing franchise," Staite wrote, adding that "there might be room to surprise on the upside" as the company works to cut costs over the next several quarters.

Staite also said that "previously there was no indication that PNC would consider selling the 22% stake it owns in BLK," underscoring a big change in plans by the bank's new management team. But the analyst underscored the complications of a sale: "We think that exiting the stake would add shareholder value but a simple sale might trigger a large tax bill and it is unclear if the surplus capital could be immediately returned to shareholders. PNC would need to think hard about the best way to structure an exit."

Oppenheimer analyst Terry McEvoy rates PNC "outperform," and in a note to clients on Wednesday wrote, "We recently raised our price target to $78 to reflect higher bank stock valuations and the increase in market value of BLK, which at current prices would add roughly $6/sh to tangible book value if sold."

"In 2012, PNC recorded $395M in net earnings related to BlackRock, accounting for approximately 13% of the company's total net income. We estimate this translates into a high teens ROE on the investment today, a greater rate of return than PNC's core banking business," McEvoy wrote.

While saying the estimates were "purely an exercise," McEvoy wrote that "if PNC sold its entire BlackRock stake today, we estimate after-tax proceeds of approximately $6.8B. Assuming regulatory approval, PNC could theoretically repurchase 96M shares of its common stock." When factoring in the decline in earnings from the BlackRock stake, as well as a lower share count after the buybacks, McEvoy estimates that his 2014 earnings-per-share estimate for PNC would increase by 2.5%. The analyst currently estimates PNC will earn $6.60 a share this year, with EPS growing to $6.70 in 2014.